Vietnam’s new-generation free trade agreements, the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), have helped Vietnam-based foreign firms benefit both market entry and tax policy incentives, experts said.
The EU removes tariffs on thousands of items sourced from Vietnam under the EVFTA
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The EVFTA alone will eliminate over 99 percent of tariffs, with the EU eliminating duties on thousands of items sourced from Vietnam. Meanwhile, Vietnam will liberalize 65 percent of import duties on EU exports to Vietnam, with the remainder of duties being gradually eliminated over a 10-year period.
The EVFTA will benefit EU businesses exporting and investing in Vietnam, Siemens Vietnam president and CEO Pham Thai Lai said, adding the EVFTA is a great foundation to further boost trade, attract more investment, create more jobs and foster sustainable development between the EU and Vietnam.
Lai forecast a robust investment inflow from the EU to Vietnam and a substantial increase in exports from Vietnam to the EU in the coming years as a result of the removal of over 99 percent of tariffs on goods traded between the two economies.
In another case, Svante Magnusson, owner of Swedish glove-maker Hestra Company, said the EVFTA will give EU investors something like a helping hand, adding the company would look to invest in a new factory in Vietnam with 200-400 employees, alongside its current factory.
Hestra, which exports its gloves to over 30 countries worldwide, will benefit from the removal of EU tariffs on gloves of up to 9 percent. This will make it easier for Hestra to export its products to the EU.
The agreement’s new rules of origin will make it easier to trade products tariff-free when they include inputs from other countries the EU has trade agreements with. This will benefit textile producers, as well as the likes of Hestra. The company exports textiles and wool from the EU to its factory in Vietnam. With the trade agreement, the products can then be shipped to the EU tariff free.
Besides, Deputy Minister of Planning and Investment Vu Dai Thang said that with the EVFTA, European corporations will have a chance to penetrate the ASEAN market and those of the members of the CPTPP.
Inflow from non-EU investors
Especially, stringent rules of origin prescribed by the EVFTA will act as a major factor that assists in wooing foreign investors from countries, which haven’t signed agreements with the EU, to set up their production bases in Vietnam and further boosting their exports to the EU markets.
These businesses will benefit from incentive policies agreed between Vietnam and the EU in the EVFTA, said Cuong from the National Economics University.
In fact, many Japanese enterprises have expressed their intention to invest in Vietnam, and are interested in trade opportunities resulted from the free trade pacts to which Vietnam is a party. A case in point is Toray Industries which wants to get involved in Vietnam’s weaving sector with a modern and complete industrial complex. As for Sumitomo group, besides smart city development, they want to jump into Vietnamese fintech segment.
A Japan External Trade Organization (JETRO)’s recent survey also showed that more than 70 percent Japanese businesses have expressed their desire to expand business in Vietnam to take advantage of the trade pacts.
